After I wrote a few diaries on the failure of Capitalism, I was assured by the believers that I was wrong. The SEC was brought up as a reason why "good capitalism" (oxymoron?) would get us through this mess and bring the utopia it has always sought. (My problem with that utopia is that far too many are excluded.) So here we have the testimony of a whistle blower, Harry Markopolos, telling us that "The SEC is ... captive to the industry it regulates and is afraid" Tell me something you protectors of Capitalism, how do you get capitalists who are willing to regulate capitalism without this being the case? You certainly will never let us Democratic Socialists regulate the golden goose. Let's look beneath the break to examine whether this case is a canary in the mineshaft or merely another thing we can blame on Bush now that he is gone.
Anyone who will still holds out for the escape that these things were hard to detect really does not deserve to be taken seriously about anything! Here's a guy who told a hearing of a House Financial Services subcommittee:
"The SEC was never capable of catching Mr. Madoff. He could have gone to $100 billion" without being discovered, Markopolos testified. "It took me about five minutes to figure out he was a fraud."
OK, so this round they were incompetent, right? No way, Markopolous goes on to say:
the securities industry's self-policing organization, the Financial Industry Regulatory Authority, is "very corrupt," Markopolos charged. That organization was headed until December by Mary Schapiro, President Barack Obama's new SEC chief.
Did I read that right? This woman was the head of the corrupt part of the SEC and Obama now has her in charge of the whole circus? Much as I like Obama, he has the same blind spot most of our population share, he too is a believer. Somehow he thinks that he, like FDR, will save Capitalism. Maybe he will. If he does, a version of the same scenario will unfold and we will be sitting in a mess much like this one somewhere down the road. How long did it take for the watchdog to be heeded?
Markopolos, a former securities industry executive and fraud investigator, brought his allegations to the SEC about improprieties in Madoff's business starting in 2000 after determining there was no way Madoff could have been making the consistent returns he claimed using the trading strategy he touted to prospective investors.
Markopolos and his team of four investigators fruitlessly pursued the quest through this decade with agency staff from Boston to New York to Washington, raising 29 specific red flags regarding Madoff's operations. But the SEC never acted.
Had the system not gone haywire, how much longer would they have pulled it off? I am dying to see the apologists comments below. I'll bet they really have little to say. What could they possibly say that would undo this level of harm caused by systematic failures in a system that is built on myth and superstition? Folks, there is no "invisible hand" only the gloved hands of the the thieves who steal the fruits if their hard work from the working people who produce the real wealth in this world. When will we wake up? We go on, generation after generation, replaying the same worn out scenario, restating the same worn out arguments, and nothing changes. Now we talk openly about some kind of "change" but it looks very much that the sacred cow is not part of that change.